How are we doing? 7 key signposts for local economy
Things to watch over the next half year include the sharpening rivalry between hometown airline Alaska and deep-pocketed Delta, and whether Amazon’s amazing growth can keep going.
Special to The Seattle Times
This is why I don’t make predictions.
In late December, I laid out some markers on issues that could have profound implications for the Puget Sound region. Six months in, almost all have been settled.
The future of the 777X? It will be built here.
A new chief executive for Microsoft? Satya Nadella is in place with favorable reviews. Microsoft shares are doing better than they have in years.
The $15 minimum wage in Seattle? It has been approved by the City Council to be phased in over the coming years.
The Trans-Pacific Partnership, the most ambitious trade agreement in American history? Between squabbling among the countries involved and a reluctant Congress, it is probably not going to happen, at least this year.
One marker is less clear.
At the beginning of the year, the conventional wisdom held that the recovery would finally get some legs. That hasn’t happened.
First-quarter real gross domestic product surprised with a drop of 2.9 percent. Repeat that in the second quarter and we have a recession.
To be sure, no economist expects that. Much of the decline in the first quarter was blamed on the harsh winter in much of the country. The contraction may even be revised upward.
But it is still a cause for concern. This is the slowest recovery in the post-World War II era.
You wouldn’t know it in booming Seattle. Cranes are poking up all over the skyline and the May unemployment rate for Seattle-Bellevue-Everett was a healthy 5 percent.
Like other metros with heavy assets in technology or energy, we are doing far better than the rest of the nation.
With so many big questions from the start of the year already answered, here are some fresh markers for the months ahead:
• Amazon. Love it or hate it, Seattle’s future is heavily mortgaged to the high-paid jobs, brainpower and capital attracted to the company’s headquarters here.
Amid the fire hose of news that Amazon generates, two questions stand out. Will shareholders continue to be willing to stick with Jeff Bezos’ vision of getting big fast and deferring profits? And how well will Amazon recover from its first big stumble, because that will come?
• Delta and Alaska. Delta Air Lines says it’s only here to help, and from the advertising displays at Seattle-Tacoma International Airport, you’d think Delta owned the place.
The reality is that Delta is increasingly competing against Alaska Airlines, an important local headquarters and the biggest player at Sea-Tac. Delta has the deep pockets to drive Alaska into submission.
Delta has been a winner as the federal government has allowed the airline industry to shrink to an anti-competitive cartel. The biggest plucky outlier is Alaska. A Delta takeover of Alaska would be very bad for the local economy and for the flying public.
• The Port of Seattle. CEO Tay Yoshitani was supposed to retire at the end of June. Instead, his tenure has been extended through at least Sept. 30. Port Commissioners must find a replacement. Also, they have been holding confidential meetings with their Tacoma counterparts to share information.
What comes out of these sessions will be important for the region’s future as a shipping power. As regular readers know, the Puget Sound ports have been losing container market share. This, as the Port of Prince Rupert has a mainline railroad to the American Midwest and a wider Panama Canal will allow much Asian traffic to bypass the West Coast.
• A Seattle bubble? With so much construction, how long until we’re dangerously overbuilt? The answer depends on whether we can continue seeing our big touchstone headquarters prosper, keep birthing startups, and Asia remains peaceful so as to keep trade and ideas flowing. Oh, and whether national growth, weak as it is, collapses entirely under the weight of federal austerity.
• Keeping Boeing happy. Even with some engineering work being moved out of the Puget Sound area, Boeing remains a uniquely valuable asset for the region and state. One challenge will be whether Congress renews the Export-Import Bank, an important financing tool for airplane sales.
• Russell Investments. The venerable company, with 900 jobs in downtown Seattle, has been bought by the London Stock Exchange. Layoffs are inevitable. If the office is moved entirely, it will be a significant blow.
• Brain-drain danger. Federal austerity is having a serious effect on funding for research, including from the National Institutes of Health, a backbone of the University of Washington and Seattle’s standing as a biomedical power. If researchers lose their grants, they will go elsewhere.
I don’t make predictions. After all, 100 years ago the world was at peace and enjoying the first great period of globalization. Few thought that the June 28, 1914, assassination of the Austrian archduke in the Balkans would soon lead to world war, much less one whose consequences shaped the century and are with us still.
You may reach Jon Talton at firstname.lastname@example.org
About Jon Talton
Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest